• Hyperlocal innovation and job creation through social enterprise and socially-responsible small business.

• Funders and impact investors. What do they want and need to step up investment in this sector in a major way. How can we really improve enterprise readiness for significant funding and how can we encourage freer release of capital?

• Unusual Suspects. Connecting with nontraditional, unexpected players for job creation, social enterprise support, resource sharing, community impact investment, revenues, and community wealth.

• Beyond the Benefits. After the legislation (benefit corporation and L3C and flexible purpose laws), what happens next? How  these laws could be (but as of yet, are not being) leveraged in practical ways to help grow common good enterprises. This is mostly work that will happen off the national stage in state and local level administrative levels. But that’s where rubber meets the road in neighborhoods, business districts, and rural areas that need the economy to step up.

• “Modern” microlending models that include wrap around or at least some key social system supports, and that include village or collective cooperatives (both U.S. and international examples)

• What’s new in fundraising (along with what’s “old” and doesn’t change), such as crowdsourcing, the “democratization” of philanthropy, the increasingly crowded asking market.

Obviously, we’d love to put together sessions or panels on these topics. And hear more from colleagues about what they are doing and learning in these areas.

Many elements of other enacted legislation are included, such as broad definition of social benefit, ability of governance entities to act on behalf of interests outside of shareholder concerns (including communities and the environment), and reporting requirements denoting actual social good delivered.

Of particular note is the proposed reporting requirement [Sec. 16], which would require a social purpose corporation’s board of directors to provide a shareholders report

[P]ublicly accessible, free of charge, at the corporation's principal internet web site address, not later than four months after the close of the corporation's fiscal year. [The] report shall remain available on that web site through the end of the corporation's fiscal year.

More interestingly, the law proposes an additional accountability reinforcement provision

The superior court of the county in which the social purpose corporation's registered office is located may, after notice to the corporation, summarily order a social purpose report to be furnished to shareholders on application of any shareholder of a social purpose corporation if a social purpose report was not furnished to shareholders for at least two consecutive fiscal years

There’s great temptation to ask whether Washington state needs this law to help spur social entrepreneurship. It may be fairer to ask, however, what to make of the collective body of state laws to date.

On a basic level, we’re witnessing a patchwork of different terms– including benefit corporation, low-profit limited liability company, flexible purpose corporation, or social purpose corporation– used to describe essentially the same thing, with seemingly little visible coordination or consensus across the broad spectrum of existing social enterprise infrastructure networks and allies.

We’re also seeing a collective “huh?” among foundations, nonprofits, community development corporations, chambers of commerce, small business resource centers, local and state economic development efforts, and other key long-time supporters of community investment and innovation. The “huh?” precedes a noticeable “wha?” from government agencies that are charged with enforcing these new laws with little to no clear regulatory guidance, much less enforcement authority or funding to support the work ahead.

It’s unclear why the broader base of common good, social-minded, impact-oriented entrepreneur interests among nonprofit and for-profit sectors have yet to voice their active support– and not merely quiet ambivalence– for a law intended to introduce more flexible revenue options for their work.

Those silent voices are of particular interest when considering whether lawmakers facing mountains of competing priorities, should be directed to create more categories to better capture existing activities; or more opportunities to ensure sustainability and growth for a still-evolving sector.

In light of the current policy trend, we therefore ask the sector to consider two things:

1. If the aim is to prime the pump for currently untapped or unavailable investment capital, there’s a strong case to make for broader sector-wide information sharing and engagement than what currently exists.

2. If the aim is to score as many short-term “wins” through state legislatures in order to create an appearance of momentum that drives longer-term demand for social ventures themselves, there’s a better case to make for rethinking model legislation in its present form.

Both options requiring a clear, honest explanation of the relevancy, benefits, and risks of social enterprise measures to constituencies before any laws are introduced and voted upon. This helps guarantee vital capital (financial, knowledge, civic, and political) can and will flow where actual demand and commitment to build, support, and grow community opportunities exists– and not simply where a business opportunity presents itself.

Every US state that has passed or is considering some form of social enterprise law should be applauded. The US social enterprise sector has the power to drive effective policy solutions as a means towards successful business activity with a social conscience, tied to the success of urban and rural communities and all their stakeholders.

But do not mistake immediate success for long-term effectiveness. Sidestepping fundamental concerns among a wider base of vital community voices, no matter how difficult the dialogue, only provides a framework for failure ahead.

Myth 1. Attention to finances detracts from the “real work.” So many nonprofit advocates and program managers, not to mention board members, have bifurcated brains: program work and advocacy on one side, money on the other. Our goal, with this book, is to dissolve that barrier and help you integrate your thinking.

Skilled staff members use financial data to track program results and assess their cost-effectiveness and efficacy compared to other options. As a trustee, access to this data helps you provide appropriate oversight. If you can’t track and measure your impact, how will you know if your work is working, or whether you’re using funds as effectively and efficiently as you’d like?

Myth 2. Only people who understand finances need to look at the numbers. Maybe you don’t know anything about electricity, but you’re smart enough to call an electrician when the lights go out. Throwing a party for fifty people? Find a good caterer. Planning your retirement? Hey, professionals can help with that.

In each of these situations, you don’t have to solve the problem yourself, but you need to know enough to be concerned, engaged, and ask good questions. For example: Am I using too many appliances at the same time? If we feed everyone steak, how much will it cost? How much money do I need to save and invest each month?

You don’t need to be a CPA or Wall Street wizard to be an effective trustee. However, you’ll want enough basic wisdom to participate in the financial discussions, affirm good decisions, and raise concerns.

Myth 3. I don’t understand the language; therefore I can’t understand the concepts. You understand more than you realize. If you know you don’t have enough money to pay the rent or staff salaries until that foundation grant is received and deposited, then you understand the principle of cash flow. When a family member promises to send you $50 on your birthday, that’s an account receivable. The $600 you owe on your credit card (and why did you buy that giant television anyway?) Accounts payable. How about if your expenses are greater than the money you bring in each month? That’s what you learn from a statement of activities. So don’t be intimidated by the words; focus on the concepts.

No “best and worst” chart, comparing broad success and failure of others, will determine which decisions you should make.

No numerical recounting of what happened (or didn’t), whether from recent memory or distant past, could determine what you will (or won’t) attempt.

No forecast of assumptions, drawn from insights already known, can dictate the challenges and opportunities you must navigate.

We could add more, but then we’d have a list. See the problem?

Instead of compiling a list, as per habit, we ask you to take a moment– just one moment– at this end of the year to thank everyone involved in your efforts this year– including you. We ask you also simply to think about your year of social enterprise, and remember why you’ve chosen the work you do.

Appreciate this time to consider your work in perspective, as you archive all business suggestions, consolidate every unanswered email and voicemail messages, inventory each idea remaining on your soon-to-be-clean desk. Then begin the next year with the knowledge and gratitude that what you do matters all year long.

Business used to be about jobs and profit. Civil society organizations were the avenues to give back beyond job creation and products.

More businesses are building healthy communities, living wages and sustainable products into their corporate DNA. And more civil society organizations are embracing business values. There is a new sector emerging, one that blurs the lines between for-profit and not-for-profit worlds.

We often hear seemingly interchangeable terms like social enterprise, mission-driven business, and benefit corporations as descriptors for organizations blending business principles with common good aims. There are others, to be sure. New language is needed to define this emerging trend.

The Private Sector Has a Broader Mission

Earlier this year, Governor Andrew Cuomo signed into law a bill to bring benefit corporations to the state of New York. “Benefit corporations will mean New York is open for business in an important new way,” said state Senator Daniel Squadron. “Benefit corporations will unlock billions of dollars in new investments in New York while empowering companies to do well and do good.”

This significant legislation supersedes a body of law interpreted to mean that corporations must consider shareholder value before taking into account other stakeholders—including communities, employees and the planet. Six states, in addition to New York, already have legislation, and four more will likely follow in 2012.

The Nonprofit Sector Adopts Business Principles

Change is also happening within civil society organizations, motivated in part by entrepreneurs grounding their philanthropy in business values.

The Skoll Foundation, funded by eBay mogul Jeffrey Skoll, provides grantees funding to develop aggressive engines of growth. Called resource engines, some grantees are using funds to build business principles into their non-profit structures.

One resource engine example, Practice Greenhealth, receives over half of its annual budget from membership dues paid by health providers in exchange for services aimed at greening their hospitals.

Language Is Powerful: The Common Good Enterprise

Searching for better lexicon to describe the ongoing work in this emerging field of activity, we came across a phrase that should be brought center stage: “the common good enterprise,” defined as:

A for-profit or not-for-profit organization whose primary purpose is to promote the well-being of people and/or the planet. The organization generates at least a percentage of its revenue through the sale of goods and services (adapted from Advertising on Higher Ground by Kevin Lynch).

Why “common good enterprise”?

Its power is its clarity.

Common comes from the word “commons,” which describes a relationship to the community as a whole. Common good intuitively includes a regard for the planet, respect for individuals’ human rights, and support of communities.

Enterprise is also self-explanatory—and speaks to revenue generated from the sale of goods and services.

Common good enterprise is clearer than other terms such as the more popular “social enterprise.” Does “social enterprise” exclusively describe businesses? Or non-profits? Does “social” include the planet? Only leaps of the imagination can make the connection.

Conclusion

The labels we use for this new field matter. Easy to grasp language provides a framework to help the public co-create this emerging sector.

Clear terms can translate into financial benefit. Why not pass legislation providing government procurement advantages to common good enterprises—whether companies or civil society organizations? Could such language catalyze new capital pools?

It’s time to embrace “common good enterprise”—a term for organizations using business principles in support of the common good that will help make opportunities this field opens up a reality.

Jim Epstein is the founder and Chairman of EFO Capital Management Inc., a family investment firm based in Washington DC. Alicia Epstein Korten is a culture consultant for ReNual.